Concept 1: Estimating Book Value per Share

Contents - Index

Concept 1: Estimating Book Value per Share
©2009 OS Financial Trading System

This implementation of the dividend model for intrinsic value starts by anchoring value at the book value per share. Book value per share is defined as the total assets divided by total net shares outstanding.
Intrinsic Value is then defined to equal book value plus a "premium." The premium captures the value added to book value from the investment decision.
Estimating Book Value per Share from a 10-K Statement Filed with the SEC
The book value per share can be computed from the Stockholder's Equity section of the balance sheet. The 2008 10-K statement provided the following information:

Book Value per Share = Total Stockholders' Equity/(Shares issued - Treasury Stock) = 13,465/(2,096.981860 - 757.885937) = $10.055 equals the book value per share.
The most recent data, however, is the TTM which can be computed as follows: The 2009 Q2 results for !BM is the latest interim balance sheet at the time of this analysis:

Latest TTM Book value per share = 15,380/1,310.88 = $11.73258 per share.